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12.26 pm
Mr. David Willetts (Havant): I shall begin by reducing what might otherwise be the high drama of this occasion by saying that the Opposition will not vote against the uprating of benefits. We shall wait to see whether the Liberal Democrats repeat the mistake that they made last year, but this will not be a nail-biting debate because we do not want to stand in the way of pensioners receiving the uprating in their benefits. Perhaps we are enjoying the spirit of Christmas, as the debate on such measures is taking place a little earlier than usual.
I have some specific criticisms of the measures. We are worried about the position of people in care homes. In fact, we are worried about the Government's treatment of those people generally, because the Government do not seem to understand their interests or problems. We are concerned about the possible long-term implications of what the Secretary of State calls the simplification of rates in the minimum income guarantee.
I shall not go through all of our specific concerns, but I shall try to price out exactly the strategy that lies behind the various measures under debate. Our frustration is that, in debating with the Secretary of State, it is difficult to get a sense of exactly what the Government's social security strategy involves. I think that they thought that the right hon. Member for Birkenhead (Mr. Field) had a welfare strategy. He did have a strategy, but I agree with the Secretary of State: the right hon. Gentleman's figures never added up, and the strategy was never what it was cracked up to be. However, following the right hon. Gentleman's sad disappearance from the Government, we now have the Secretary of State with his head down, reading out his briefs, rather than giving us any clear sense of the direction in which they want to take the social security system.
In what direction might the social security system go for pensioners? As Christmas is coming, perhaps an illuminating way to think about that is to tell the story of the Christmas bonus--one of the few payments not being uprated. That story reveals much about the long-term problems that the Secretary of State's approach will create for the social security system. Of course, the Christmas bonus was introduced by the Government of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). It was their special payment to help pensioners at Christmas time.
A Labour Government came into power in 1974, found that they had inherited that special payment--they probably called it a gimmick--and wondered what to do with it. Members of Parliament, such as the hon. Member for Bolsover (Mr. Skinner)--sadly, he is not in his
place--pressed the then Secretary of State for Social Services on what she was going to do about the payment. In a debate, she said:
- there will not be a Christmas bonus. A bonus is bound to be somewhat arbitrary in coverage and excludes a number of people who benefit from a general uprating.--[Official Report, 22 May 1975; Vol. 892, c. 1624.]
The trouble with special schemes is that there is no provision for their annual uprating. The hon. Member for Stroud (Mr. Drew) asked, in an earlier debate, what the value of the Christmas bonus would be if it had been uprated from its original 1972 value of £10. The answer is that by April 2000, a prices uprating would have taken its value to £76.75.
The social security system contains a series of special payments that are left over as a kind of historical deposit from different Governments trying their own special wheezes to help pensioners. They include the over-80 payment--a very good concept, but it has never been increased from 25p. That has been a source of anger and irritation to pensioners. We also have the Christmas bonus, left over from the Government of my right hon. Friend the Member for Old Bexley and Sidcup. No one, apart from the previous Labour Secretary of State for Social Services, has ever abolished it, and since it was reintroduced it has not been uprated. No pledge has been made to uprate the winter fuel payment. That is a political decision taken every year; I agree with the hon. Member for Northavon (Mr. Webb) on that point. At present, the Government's official position seems to be that the payment will be cut next year from £200 to £150.
If we go on in this way, we shall have a social security system with a variety of special payments for pensioners, each with its own political or historical justification. It would be much better if all that money, and more, were put into the basic state pension. The Secretary of State fails to explain why he believes that a pension system that is growing all those extra payments for special circumstances will be superior to one in which a guaranteed amount of money is put into uprating the basic weekly state pension.
Mr. Darling: About 2.5 million people who do not receive the basic state pension receive the winter fuel payment. There are also people who do not receive the full pension. If the hon. Gentleman were to take away the winter fuel payment, the free television licence and the Christmas bonus, what would be the cost of ensuring that all those affected would have the same amount of money returned to them in full?
Mr. Willetts: All the money saved would go to all pensioners in receipt of the basic state pension. That includes many pensioners who, for a variety of reasons, do not benefit from the Secretary of State's special schemes. Pensioners who are on income support, or who are having their costs met in residential accommodation or nursing homes, do not benefit from the winter fuel payment. Our payment would go to all pensioners in receipt of the contributory pension.
I heard the intervention by the hon. Member for Walsall, North (Mr. Winnick) about television licences, and I understand all the arguments pro and con. However, many pensioners over 75 live in a household with someone under 75, who would normally pay for the TV licence. Therefore, the chances of the free TV licence bringing an extra £104 to every pensioner over 75 are, sadly, limited. For example, many pensioners live with a son or daughter, who normally pays for a licence. Are those sons or daughters likely to say to their elderly parents, "Here's £104, because we now have the benefit of your free TV licence"? Our proposal is simpler and more straightforward, and will reach pensioners who do not enjoy the benefit of the winter fuel payment or the free TV licence.
Mr. Darling: I might have missed something, but I do not think that the hon. Gentleman answered my question. Some 2.5 million people who receive the winter fuel payment and the other payments do not have a full pension; some of them have no pension. Will the value of all the benefits--the winter fuel payment, the free television licence and the Christmas bonus--be restored to them in full?
Mr. Willetts: I have made it clear that our policy is for all people in receipt of the basic pension. There would be a full uprating for pensioners who are not receiving the full value of the basic pension. The costing of our proposal includes giving the full increase to all pensioners who receive the partial or full value of the contributory pension. That is our policy. It has a much greater logic than the various special schemes--[Interruption.]
Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Gentleman, but the hon. Member for Stockport (Ms Coffey) should remember that parliamentary private secretaries are meant to be silent, certainly when they are sitting down.
Mr. Willetts: They should be seen and not heard.
We should compare the distributional consequences of our measure, which would go to all pensioners in receipt of the basic pension, including those who receive it at less than full value. It would help pensioners who, for various reasons, will not benefit in full, or even partially, from the Secretary of State's proposals. For example, pensioners in sheltered accommodation pay a reduced rate of £5 for a television licence, but the full value of the increase would be consolidated into their basic pension. Out package would also help pensioners in residential accommodation and nursing homes. It is better designed than the schemes that it would replace.
Mr. Winnick: Does the hon. Gentleman accept that people who receive the full pension often pay tax, and will therefore have to pay tax on the additional sums, which are now tax free? What would a Tory Government's approach be to people who are not entitled to the state pension? Presumably, his package would mean that they would not receive a penny of what is being provided by the television licence scheme and the winter fuel allowance.
Mr. Willetts: On the second point, I explained that our package is for people in receipt of the contributory
pension. The hon. Gentleman has studied the subject for many years. If we compare the various groups who, for whatever reason, will not be able to participate fully in the Government's special schemes, but who would benefit from a substantial increase in the basic pension, we will find that overall, the distribution of that package would be more beneficial than the alternatives, because it would go to every pensioner.As for the hon. Gentleman's first point, my right hon. Friend the Leader of the Opposition made it clear in his original statement that we recognise that, although the special payments are tax exempt, the basic pension is taxable. That is why we have said from day one that we would adjust tax allowances, which we could do by using the device of the age allowance for pensioners. Therefore, the package would not increase the tax taken from pensioners. I regret the fact that the Secretary of State goes on and on as if we had never said that. The costings of our proposal show that there is no special device to collect extra tax from pensioners to help finance it. It is straightforward and simple.
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